When the recession hit Santa Clara-based Blach Construction Co. a few years ago, the company responded with temporary wage freezes. But not content to let employees wonder if they were next, President and CEO Mike Blach got up in front of employees and told them exactly what was going on and how the company was handling the downturn.

“Employees knew that by taking a conservative approach (of wage freezes) we were going to save jobs and not do layoffs,” said Gaye Landau-Leonard, vice president of human resources at Blach.

As a result, said Landau-Leonard, “Employees don’t have to second-guess if the ax is going to fall on them because they know the CEO and executive team will always tell them the truth about what’s going on.”

Even as the economy shows signs of recovery, fears about unemployment continue to weigh heavily in many people’s minds. Smart companies like Blach know that in times like these building a happy and loyal workforce is about honesty and transparency from upper management — even if that means having to share the bad news.

“It’s better for us to tell more,” said Mark Lipscomb, vice president of human resources at San Jose-based Stryker Endoscopy, a medical technology company. “When (the recession) happened we brought everybody into the cafeteria to talk about our finances. Because if we don’t, rumors start to fly.”

At San Francisco public relations agency Pereira & O’Dell, if the company loses a bid for a big potential client, for example, executives let the whole company know, rather than just those directly involved.

“We get the group together and let them know,” said CEO Andrew O’Dell. “When you don’t win it, you move on as a team, and have beers together. You do that as a group. … We think it’s really important because it builds trust and confidence. (It shows) we’re looking out for their needs, not just our own.”

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